Trump’s Economy

Today President Trump signed into law the Tax Cuts and Jobs Act.  The biggest problem that the President will have with these tax cuts is that he now owns the economy.  That is going to be a big problem, because this is now Trump’s economy. This is now the Republican economy.

It’s All Bullish

Now, Trump now already owns the stock market, and that has served him well so far this year. But you know what?  The stock market could be getting ready to enter a big bear market. I’ve never seen so much bullishness, so much unfettered optimism on the market in my life.  Not only on the market, on the economy – it’s a no-brainer! Guest after guest on CNBC, “There’s no way the market is not going to continue to go up!”  “The only question is, how much higher is it going to go?” One bull after another – nobody is bearish.  The networks are not even willing to allow my point of view to  be expressed on the air, in spite of the fact that I was good for their ratings.  I don’t think CNBC wants an investment professional to come on and be bearish. To talk about the problems that underlie the economy, to talk about problems with the stock market, it’s all bullish.

Trump Will Own the Bear Market, Too

This crazy optimism; everything is great, nothing can go wrong, oh yeah?  How about inflation pushes up bond yields.  How about corporations end up having to spend more on debt service payments, some of which is no longer deductible.  How about inflation causing an increase in raw material costs? How about the consumer being so strapped with rising prices, no savings and record debt, that earnings go down?  There are so many things that can go wrong when you have an overpriced stock market where everybody is in, and there is no money on the sidelines. So if we go into a bear market, Trump owns it.